A RECENT audit by the Auditor General has revealed that all seven health boards in Wales have failed to meet their statutory duty to break even over a three-year period, underscoring the growing financial pressures on the NHS. The findings, drawn from the 2023-24 accounts of NHS bodies, have sparked concerns about the sustainability of health services in Wales.
The audit, which provides a comprehensive overview of the financial health of NHS bodies, concluded that while the accounts present a true and fair view of their financial positions, the seven health boards were unable to achieve the statutory financial balance required by law. Consequently, the Auditor General was compelled to qualify his ‘regularity’ audit opinion for these health boards.
In contrast, the three NHS trusts and two special health authorities in Wales successfully met their break-even duties, offering a glimpse of hope in an otherwise challenging financial landscape.
Particularly concerning were the findings related to Betsi Cadwaladr University Health Board and Velindre NHS Trust. Both were found to have breached standing financial instructions, leading to irregular expenditure in payments made to former senior officials. For Betsi Cadwaladr, this marks the second consecutive year of such breaches, further highlighting the governance challenges faced by some NHS bodies.
The financial strain on the NHS in Wales is exacerbated by a combination of rising demand for services and the impact of inflation. In 2023-24, health services in Wales received £10.638 billion in revenue funding, an increase of £744 million from the previous year. However, despite this substantial cash uplift, the real-term increase in funding was just 1.2%, a modest improvement compared to the 4.9% real-term decrease in 2022-23.
The audit also highlighted a growing in-year deficit, which has risen to £183 million in 2023-24, up from £150 million in the previous year. The three-year cumulative overspend across the NHS has now reached £385 million, a significant increase from the £248 million recorded in 2022-23.
One area of concern is the expenditure on agency staff, which, despite a 19% reduction in 2023-24, remains a significant cost at £262 million. This spending largely covers workforce vacancies and additional activity to meet rising demand, underscoring the ongoing staffing challenges within the NHS.
In response to these financial pressures, NHS bodies have been striving to deliver significant savings. Reported savings for 2023-24 reached £210 million, the highest level since 2018-19. However, much of these savings are non-recurrent, with 41% of total reported savings falling into this category, down from 60% in the previous year.
The Auditor General, Adrian Crompton, expressed concern over the situation, stating, “The growing cumulative deficit for the NHS in Wales demonstrates that despite record levels of investment and higher than ever levels of savings, the statutory framework put in place by the Welsh Government to drive financial sustainability in the NHS is not working.”
Mr Crompton called for more fundamental changes to address the challenges faced by the NHS, including the need to reconsider its structure, funding, and workforce. He urged politicians, government officials, and NHS bodies to collaborate on finding sustainable solutions to these pressing issues.
As the NHS in Wales grapples with these financial challenges, the publication of the NHS Wales Finances Data Tool 2023-24 provides further insight into the current financial positions of NHS bodies, offering a valuable resource for those seeking to understand the complexities of healthcare funding in Wales.
Auditor General, Adrian Crompton told this newspaper: “Whilst I recognise the scale of the financial and operational challenges faced by the NHS, I am concerned at once again having to qualify my audit opinion on the accounts of all seven Health Boards because they have failed to meet the statutory duty to break even over three years. The growing cumulative deficit for the NHS in Wales demonstrates that despite record levels of investment and higher than ever levels of savings, the statutory framework put in place by the Welsh Government to drive financial sustainability in the NHS is not working.
Whilst there remains an urgent need for NHS bodies to continue to drive out cost inefficiencies in the way they work, this alone is unlikely to return the NHS to financial balance. More fundamental challenges now need to be grasped around the shape and infrastructure of the NHS, the level of funding it needs, its workforce challenges and how the demand for its services can be better managed. These are issues that should exercise the minds of politicians, government officials and NHS bodies and their partners in equal measure.’
The ongoing financial pressures and the inability of health boards to meet statutory obligations serve as a stark reminder of the urgent need for strategic planning and reform within the NHS to ensure its long-term viability.
